BOSTON – NStar has agreed to buy power from the proposed Cape Wind offshore wind farm for more than double the cost of conventional sources, according to The Associated Press.

The 15-year, $1.6 billion contract will add $1.08 to the monthly bill of the average residential customer, since NStar will pay $940 million above the market price of conventional electricity during that period, according to the AP.

The contract with NStar is for 27.5 percent of Cape Wind’s projected power output. The company also struck a nearly identical deal with National Grid in 2010 for 50 percent of its projected output.

NStar representatives said that Cape Wind was worth the price tag because the utility company is required by Massachusetts law to buy renewable power or risk not passing Massachusetts requirements regarding green energy

“We recognize that there is a cost associated with renewable energy, but we see it as an investment in the state’s clean energy future,” NStar spokeswoman Caroline Pretyman told the news service.

A Cape Wind-commissioned report update released Friday, on the other hand, estimated that the energy company would reduce wholesale electric prices for the New England area by $7.2 billion over 25 years.

The numbers in the updated report were attributed to an increase in power plant retirements and a larger price gap between natural gas and fuel oil.

The original report was published in February 2010, around the time National Grid struck its deal with Cape Wind.

When National Grid and Cape Wind signed their contracts, Cape Wind power was 82 percent above the projected market price for conventional energy. Now, power from Cape Wind will cost 137 percent more than conventional power during that period, said the AP.

Rodgers said that dropping natural gas prices may make Cape Wind look more expensive now, but in the long run, zero-cost renewable power will drop prices for customers.

Get the most up-to-date data on the Rhode Island and southern Massachusetts business community from the PBN List Center. Download and purchase PBN Lists as well as the complete Book of Lists in Excel format.